Formation of a Limited Liability Company in Malta
A Malta LLC is a tax-efficient corporate structure for withholding taxes on dividends and refunds of tax on profits. It is commonly used for international trade, shipping, e-commerce and e-gaming businesses.
Malta is also a politically stable jurisdiction with full membership of the European Union.
FACTS & INFO
The term 'offshore' was previously used in Malta only in the context of an ’offshore company’, which has since been phased out in favour of the International Trading and Holding company (ITC and IHC) forms. Non-residence was a key criterion for obtaining offshore tax treatment in most situations. Until 1 January 2007, Malta allowed the incorporation of International Holding Companies and International Trading Companies, both of which were attractive due to the generous refunds of tax allowed to non-resident shareholders. However, this practice ended in 2010 following EU pressure on Malta to end the tax discrimination between resident and non-resident shareholders of Maltese companies.
After an agreement reached with the EU, from 1 January 2007 Malta has amended the Income Tax Act to create what is today known as the Malta Company, while keeping in place the full-imputation system of corporate taxation (thus ensuring that these companies are still the most tax-advantageous corporate structures within the EU). A Malta Company is a normal onshore Maltese company registered in Malta, which is allowed to carry on any kind of activity. The company can also mix the nature of its business and is not limited in any way.
Maltese company law derives chiefly from civil or Roman law, rather than common law. A new Companies Act 1995 replaced the old Commercial Partnerships Ordinance, and set up a new regime for commercial entities under the Malta Business Registry. By far the most usual form that businessmen and/or corporations prefer is the private company limited by shares. An LLC may take the form of a private company or public company.
Malta companies must use the suffix "Limited" or "Ltd." to denote limited liability and can use any name unless it includes words such as "Empire", "Crown", "Imperial", "Windsor", "Royal", "Chartered", or "Municipal". Special consent is required for names such as "Bank", "Insurance", "European", "Maltese", or "International".
MEMORANDUM AND ARTICLES OF ASSOCIATION
To register a limited liability company, a memorandum and articles of association must be prepared by a licensed law practitioner and filed at the Malta Business Registry. A limited liability company may be registered by the shareholders or their authorised agent. In practice, a local firm of lawyers, accountants or consultants is engaged to carry out all necessary formalities. A memorandum specifies the activities in which the company may engage, and the articles of association specify the rules governing the internal management of the company.
The number of shareholders in a private LLC may be from 2 to 50. Single-member companies can be incorporated under certain conditions. Details of shareholders appear on the public file but anonymity can be preserved by the use of nominee shareholders. The company must have at least 2 shareholders, one of which must be a physical person. Bearer shares cannot be issued.
A Maltese LLC may be registered with a minimum authorised share capital of €1,250. It is also required that 20% of the authorised share capital is paid up.
DIRECTORS AND COMPANY SECRETARY
The minimum number of directors is one, who may be a corporate body or an individual. The full name, nationality, residential address and occupation, together with a copy of a passport, are required. Details of the directors appear on the public file but anonymity can be preserved by the use of nominee directors.
It is required that a Maltese resident secretary is appointed.
Every company registered in Malta is required to have a registered office and address in Malta, which should be notified at the Business Registry.
Company meetings need not be held in Malta.
Usually 3 to 7 working days.
RECURRING MAINTENANCE FEES
As from the second year, there are recurring maintenance fees of €2,700. These include:
- Provision of registered office and registered address
- Provision of company secretary
- Annual government fee
- Preparing and filing of annual returns
Maltese companies incorporated after 1 January 1995 are considered as being resident in Malta for tax purposes, irrespective of the place of management and control. Following pressure from the EU on Malta to remove the discrimination in its corporate taxation laws between resident and non-resident shareholders, corporate taxation has been reformed and now varies between zero and 10% for all shareholders.
Generally, the main tax advantages of a Maltese LLC are:
- A low effective tax rate on worldwide profits as follows: 0% on dividends received from a participating holding, that is: 1) where the parent company holds at least 10% of the equity in the subsidiary; 2) or holds an investment in the subsidiary of at least €1.5m and holds that investment for more than 183 days).
- 0% on capital gains made from the disposal of a participating holding;
- 5% on dividends from non-participating holdings;
- 5% on trading income;
- 10% on passive income (interest, royalties etc).
- possibility to have an EU VAT number for EU VAT trading (where applicable);
- no withholding tax on distribution of dividends to the shareholders.
The corporate tax rate in Malta is 35%. The taxable income for companies which are both resident and domiciled in Malta includes the worldwide income and certain capital gains.Сorporate tax of 5% is effective if companies are owned by non-residents or by residents without domicile in Malta. The unique structure complies with the “subject to tax” regulations of double tax treaties: companies pay a profit tax of 35% and the recipient of dividends receive 30% or 6/7, if it is a corporation whose beneficial owners are not both resident and domiciled in Malta.
Malta does not levy withholding tax on dividends paid to shareholders. Royalties are also not subject to withholding tax.
AUDIT AND ACCOUNTING
All Malta registered companies must file annual returns showing details of shareholders and directors, and must submit their audited accounts.
Our Services and Requirements
OUR SERVICES INCLUDE:
- Name check and approval
- Filing of the incorporation documents with the Malta Business Registry
- Payment of the government fees
- A standard set of original corporate documents
- Provision of registered office and registered address for one year
- Rubber stamp
Please note: If applying for a corporate bank account you will need to order a full set of apostilled company documents when the account is opened outside of Malta.
Please provide the following documents for all directors, shareholders, beneficial owners, and authorised signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within three months).
- Original or certified copy of Banker’s reference letter (dated within three months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and certificate of good standing (for companies registered more than one year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without the required license or authorisation granted by a relevant authority in any jurisdiction, Starting Business will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but are not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need assistance in the licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.